(2005) Based on the book by Fortune journalist Bethany McLean and Peter Elkind, documentary-film director/writer Alex Gibney recounts the rise and fall of Enron, from its founding (conceived during a successful campaign to deregulate businesses from government regulations) in 1985 by Ken Lay to its becoming the seventh largest company (worth nearly $70 billion) to its dramatic collapse into bankruptcy in December 2001 over a period of just 24 days.

While its executives took well over $100 million in stock before Enron's demise plus received $55 million in bonuses (Ken Lay alone was compensated $300 million over four years, all of which his wife Linda said when asked is "gone"), twenty thousand employees lost their jobs and most of their retirement savings in 401K investments; shareholders were out $2 billion. In January 2002 Enron's chief deal maker and close friend to former CEO Jeffrey Skilling, John "Cliff" Baxter, committed suicide.

The smartest guys in the room, Lay and Skilling, were the most arrogant, most prideful, and greediest as well. From 1987 onward there were signs of duplicity within Enron, beginning with a pair of rogue traders in the scandal exposed (involving off-shore accounts and funds diverted to personal accounts) in Valhalla, NY; rather than being fired or disciplined, they were encouraged by management to "please keep making us millions." Why did no one else other than former employee Michael Muckleroy point out the company's suspicious steady growth in profits?

Lay then discovered the "incandescently brilliant" Skilling (favorite book, The Selfish Gene) who transformed Enron into a "stock market for natural gas," employing mark-to-market trading (open to manipulation but approved by the accounting firm Arthur Andersen). With its "new economic religion" (notice the cross on Amanda Martin-Brock's necklace) and ideology of free trade, aggressive traders (Californians can be excused for thinking of them as traitors who raped the state of $2 billion during the energy crisis) in a macho culture ("guys with spikes") made millions for themselves and billions for Enron.

Meanwhile, a slick PR campaign ("new, different, innovative") went after the hearts and minds of Wall Street with a pump-and-dump strategy, boosting quarterly profits that propelled stock prices upward during a huge bull market of the late '90s. Meanwhile, terrible actual performance worldwide (e.g., a billion-dollar reversal in India) required imaginary profits. Enron merged with Portland General Electric and then made a deal with Blockbuster to sell bandwidth on the Internet. Analysts trusted what Skilling told them; the few who criticized, such as John Olson (fired by Merrill Lynch), were punished. By the end of 2000 as the stock market began its steep descent, Enron continued its magic show of illusions: Fortune hailed it as "the most innovative company."

Company executives began selling their stock while touting its long-term value to the public and its own employees. For one journalist at Fortune, however, something didn't add up; Bethany McLean asked Skilling: "How exactly does Enron make its money?" In her estimation CFO Andrew Fastow took the ultimate step into the territory of fraud by concocting a way to prop up the stock price (fabricating a multitude of associated companies with names such as Jedi, Raptors, and most infamously LJM, with which he in effect did deals with himself) while the company was actually $30 billion in debt.

Others interviewed argue that there was "complicity across the board," beginning with Enron's executives, who took advantage of Wall Street's greed, using accountants, lawyers, and bankers, who ignored the system of checks and balances (Senator Carl Levin speaks of an "accounting sham"), as "useful idiots." Former Enron VP Sherron Watkins, who courageously blew the whistle, alleging massive fraud, which led to the SEC's investigation and ultimately the company's unraveling within six weeks, perceives Fastow as the fall guy for Skilling (who abruptly resigned as CEO on 14 August 2001) and Lay.

The truth behind the politics would be fascinating to know better: Enron was George W. Bush's biggest contributor to his presidential campaign; Lay had easy access to VP Cheney (just recall the legal fight to keep the notes on the energy meetings with Cheney, in which Lay participated, secret); on Lay's recommendation of Pat Wood's becoming head of the Federal Energy Regulatory Commission; and as a result of the rolling blackouts and skyrocketing energy costs in California (in large part caused by Enron traders) Democratic Governor Gray Davis was recalled and replaced by Republican Arnold Schwarzenegger.

With the bankruptcy coming just months after 9/11, one could be forgiven for accusing these guys of being terrorists attempting to undermine the American economy. I think former president George H.W. Bush honestly expressed what motivates these people - not their country, their company, the public, or their employees - but their own: "What really matters [is] your family, your friends." But the guy who got away with the most, Lou Pi, former CEO of Enron affiliate EES, left the company with $250 million to become the second largest landowner in Colorado, dumping his first wife for another, a perfect match since both had been strippers.

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Copyright © 2008 Patrick Ivers. All rights reserved.
Reproduced with the permission of the copyright holder.

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